Wednesday, 10 March 2010

Cebu Pacific to use IPO funds to buy 20 planes

E. N. J. David and N. J. C. Morales
Business Mirror

GOKONGWEI-LED Cebu Air, Inc. will use the bulk of funds to be raised from a planned initial public offering (IPO) to buy up to 20 more aircraft within five years, an executive of the budget airline’s parent said yesterday.

Cebu Air, which operates as Cebu Pacific, has yet to set the date for the IPO, which will raise P12 billion, but had secured clearance from regulators.

“It’s going to be for capital expenditures for purchasing airplanes. We have a purchase order from Airbus for 15 Airbus A320 in the period of 2010-2015 and an option to buy five more,” said Bach Johann M. Sebastian, senior vice-president for corporate planning of listed JG Summit Holdings Philippines, Inc.

Documents showed the carrier needed to make P9 billion in advanced payments to increase its fleet to 49 by 2014.

Mr. Sebastian however said going public was only one option, and that funds could also be raised through loans from export credit agencies.

Cebu Pacific can also tap the lease market, he said.

The airline is planning to list 125.3 million new common shares with a par value of P1.00 each, which would be offered to the public at a maximum price of P95.00 apiece. A total of 110.3 million secondary shares will be listed at the same price.

JG Summit will list 35.3 million shares it owns “subject to the over-allotment option granted to the stabilizing agent under the same terms and conditions as the primary and secondary offer.”

An additional 18.4 million shares will also be listed as part of a stock option plan for executives.

The company originally planned to go public in 2008 but postponed the IPO due to difficult market conditions.

Cebu Air turned around last year by recording a net income of P3.184 billion, from a net loss of P3.259 billion in 2008. Operating income almost doubled to P3.164 billion from P1.727 billion in 2008.

Shares in JG Summit closed P0.60 higher at P8.00 apiece yesterday.

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